In many ways, Green Economy objectives simply support those already articulated for the broader goal of sustainable development. But this new framing responds to two recent developments.

First, there is a deeper appreciation today by many governments, companies, civil society and the public that we are reaching planetary limits, not just in terms of greenhouse gas emissions but also in our use of water, land, forests and other natural resources. The environmental and social costs of our current economic model are becoming more and more apparent.

Second, and perhaps even more important, the global recession has led to a reconsideration of key tenets of the current economic model – such as the primacy of growth and the belief in light-touch regulation. In openly questioning the strength of the status quo, many public- and private-sector leaders are seeking:

• Policies and regulations that can identify and manage financial and other risks more effectively
• New markets and industries that can create good, long-term jobs
• Public support for innovation to position a country to compete in tomorrow’s markets

These developments point to the need for new sources of growth that are environmentally sustainable – for example, employment in high-growth sectors such as clean energy. Past sustainability efforts have not focused sufficiently on fixing the failures of economic policies such as pricing pollution. But we now have a chance to tackle these challenging problems given the policy openings created by the response to the financial crisis. A good example is Korea’s adoption of a national green growth strategy.

One question people ask is “can we afford this?” We’re still in the wake of the global financial crisis and many people perceive Green Economy solutions as expensive. The United States is asking itself whether it can afford to put a price on carbon today. Developing countries are concerned that transitioning to a Green Economy will hinder economic growth and the ability to reduce poverty. Moreover, there will be short-term, nontrivial losses associated with changes in industry and market structure (e.g., a decline of the coal industry and related job losses.) Supporting those actors who will bear the brunt of the transition will be critical to building broad ownership for a Green Economy.

Some countries feel that they are lagging in green technology know-how and therefore will be at a competitive disadvantage in the race for future markets. Others feel that the Green Economy is a pretense for rich countries to erect “green” trade barriers on developing country exports. These are all legitimate concerns that deserve attention. Ultimately, a hard-nosed economic analysis should inform decisions on what policies and investments to promote today. When the full costs and benefits over time are taken into account however, many Green Economy solutions will be seen as more attractive. Nevertheless, there will still be difficult choices and trade-offs.

For example, should India aggressively promote grid-connected, relatively expensive solar power when hundreds of millions in the country still have no access to electricity? And even where Green Economy solutions make economic sense, they may be politically challenging. The transition to a Green Economy will not be easy.

The principal challenge is how we move towards an economic system that will benefit more people over the long run. Transitioning to a Green Economy will require a fundamental shift in thinking about growth and development, production of goods and services, and consumer habits. This transition will not happen solely because of better information on impacts, risks or good economic analysis; ultimately, it is about politics and changing the political economy of how big decisions are made.

The problem is vested interests. Those who benefit from the status quo are either overrepresented in or have greater access to institutions that manage natural resources and protect the environment. US climate legislation, for example, was defeated in no small part by resistance from fossil-fuel based energy advocates.

The following steps would help create a more level policy-making playing field:

• Increase public awareness and the case for change. Greater visibility on the need for this transition can motivate voters and consumers - not just because of the costs but also the economic benefits generated by a Green Economy, such as new jobs and new markets. People will not adopt policies because they are green. They will do so when they believe it is in their interest.
• Promote new indicators that complement GDP. Planning agencies and finance ministries should adopt a more diverse and representative set of economic indicators that focus less exclusively on growth and track the pace and progress of development.
• Open up government decision-making processes to the public and civil society. This would help ensure policies are accountable to the public and not to vested and well-connected interests.
• Identify and take advantage of political leadership when available as this will be crucial in order to limit the undue influence of “dirty” economic holdouts.

Timing is everything when it comes to big policy reforms. Green Economy advocates will need to be ready when that window of opportunity presents itself. Ultimately, the widespread transition to a Green Economy will depend on whether or not the long-term public interest is reflected in today’s economic policies.